Most solicitors are budget busters, say costs lawyers

Stark: many solicitors have still not properly engaged with the process

Just 2% of costs specialists work with solicitors who always stuck to their budgets, according to the Association of Costs Lawyers (ACL).

At a time when the success of costs management, or lack of it, is under scrutiny with plans to extend fixed recoverable costs, the ACL said the research highlighted how it has failed to change behaviours as was hoped.

The survey of 117 costs lawyers found that 72% said solicitors “sometimes” went over their budgets, while 22% said this always happened.

It said one reason may be that budgeting takes place too early on in proceedings. Half (51%) of costs lawyers said that instead of doing it at the first case management conference as now, the hearing should be held later, once the course of the litigation is clearer.

In the meantime, solicitors should be updating their budgets if required as the case progresses. However, judges have often complained that this rarely happens, and the survey backs that up – almost a third of costs lawyers (32%) said they had never seen an application to update a budget, while only 18% reported that their number was increasing.

However, judges continue to be a problem. Given a set of statements on how costs management was working, the most popular (ticked by 62% of respondents) was that “it depends on which judge you’re before”, while 32% agreed that “judicial inconsistency is killing it”.

Just 10% thought that judges were finally getting the hang of costs management. Some 41% of costs lawyers said the process had brought their skills to the fore.

The survey also uncovered concern about the Court of Appeal ruling earlier this year in Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120, which suggested that the first case and costs management conference was the place to contest the reasonableness and proportionality of costs that have already been incurred – rather than just those to be incurred in the future. It had been thought that these should be left to detailed assessment at the end.

Four in ten Costs Lawyers said the ruling had made the first conference much more contested and significantly increased the amount of preparatory work as a result. The same number said there needed to be a rule change – something that is under consideration.

ACL chairman Iain Stark said: “We are more than three years into costs budgeting and the reality is that – while it has been of benefit in some instances – it has not delivered in the way that was hoped. This is, at least in part, because many solicitors have still not properly engaged with the process, even though they risk court sanctions as a result.

“The alternative, as laid out starkly by the senior judiciary recently, is fixed costs for cases worth up to £250,000 – a figure that covers the vast majority of litigation in England and Wales. Maybe this is the shock solicitors need to get serious about costs budgeting. Costs lawyers stand ready to help them.”

Mr Stark has been appointed as one of the 14 assessors working with Lord Justice Jackson in his review of fixed recoverable costs.

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